Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 174667931X

URN:: urn:nbn:de:zbw-retromon-119897

Document type:: Monograph

Author:: Grunsky, Carl Ewald http://d-nb.info/gnd/10180959X

Title:: Valuation, depreciation and the rate base

Edition:: 2. ed., revised and extended

Place of publication:: New York

Publisher:: Wiley

Year of publication:: 1927

Scope:: X, 500 Seiten

Digitisation:: 2021

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XVI. The rate-base and depreciation in recent decisions of the U.S. Supreme Court

Collection:: Economics Books

THE RATE-BASE AND DEPRECIATION ls be supposed to be subject to depreciation, and what doubt might arise with reference to the propriety of including engineering charges in these figures is at once dissipated when it is considered that the property will not be constructed again as an entirety, but is to be kept up by annual renewals from time to time made, so that engineering, and other such overheads caused by the assembling of the plant, will not have to be provided against, because they will not again be incurred.” The definition here given of annual or current depreciation is identical with what the author contends should be called the annual replacement requirement. That the import of the latest decisions of the United States Supreme Court in rate cases is the protection of the legitimate investment will appear from a careful reading of the decisions in the Southwestern Bell Telephone Company case, in the Blue- field Waterworks case and in the Georgia Railway and Power Company case from which the following extracts should prove of interest. In the case of the Southwestern Bell Telephone Company vs. Public Service Commission of Missouri (262 U. S., p. 276, and L. Ed., p. 981) decided, May 21st, 1923, it was shown that the Commission had made an estimate of the actual cost of the property decreased by depreciation and had used this as the rate-base. The Court found fault with the Commission because of its disregard of the higher prices of labor and materials which prevailed at the time when the rates were fixed as compared with those which prevailed at the time the plant was constructed. “ Obviously, the commission undertook to value the property without according any weight to the greatly enhanced costs of material, labor, supplies, etc., over those prevailing in 1913, 1914 and 1916. As matter of common knowledge, these increases were large.” The principle is here clearly favored of giving consideration in a fair measure to the fluctuating value of the dollar. (See Chapter XIV.) On this subject of valuing physical properties at prices of labor 1c

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